On November 14, 2024, Origin Materials Inc (ORGN, Financial) released its 8-K filing detailing the financial results for the third quarter of 2024. Origin Materials Inc, a carbon-negative materials company, focuses on transforming biomass carbon into valuable materials, eliminating fossil resource dependency, and capturing carbon in the process. The company offers products such as PET circular caps and closures, Para-xylene, carbon black, and Levulinic acid.
Performance and Challenges
Origin Materials Inc reported a quarterly revenue of $8.2 million, slightly below the analyst estimate of $8.30 million. This revenue was primarily generated through the company's supply chain activation program. Despite the revenue shortfall, the company achieved a significant milestone with the successful Factory Acceptance Test of its first CapFormer System, which demonstrated over 98% manufacturing efficiency. This development is crucial as it positions the company to commence commercial production by the end of the year, with revenue ramping up in the first quarter of 2025.
However, the company faces challenges, including a net loss of $36.8 million for the quarter, compared to a net income of $30.9 million in the prior-year period. This loss was influenced by a $15.2 million non-cash impairment charge and increased operating expenses. The company's focus on caps and closures and an asset-light furanics strategy led to a decision not to utilize the Geismar, Louisiana site, resulting in a $12.3 million non-cash impairment of assets charge.
Financial Achievements and Industry Importance
Origin Materials Inc's achievements in the third quarter include the successful testing of its CapFormer System, which is expected to produce between 8 and 12 billion caps per year when fully operational. This development is significant for the chemicals industry as it introduces a commercially viable manufacturing system for PET caps, enhancing recycling circularity and packaging performance.
Income Statement and Key Metrics
The company's operating expenses for the third quarter were $32.5 million, up from $12.9 million in the prior-year period, primarily due to non-cash impairment charges and increased depreciation expenses. The adjusted EBITDA loss was $12.0 million, compared to $9.5 million in the previous year, reflecting higher general and administrative expenses.
This quarter we achieved a milestone on our journey to profitability: the successful Factory Acceptance Test of our first CapFormer System," said Rich Riley, Co-Chief Executive Officer of Origin.
Balance Sheet and Cash Flow
As of September 30, 2024, Origin Materials Inc reported cash, cash equivalents, and marketable securities totaling $113.4 million. The company's total assets were $399.6 million, with total liabilities of $40.7 million. The net cash used in operating activities was $45.1 million for the nine months ended September 30, 2024.
| Metric | Q3 2024 | Q3 2023 |
|---|---|---|
| Revenue | $8.2 million | $7.1 million |
| Net (Loss) Income | $(36.8) million | $30.9 million |
| Adjusted EBITDA Loss | $(12.0) million | $(9.5) million |
Analysis and Outlook
Origin Materials Inc's focus on its caps and closures business is a strategic move towards profitability, with expectations to achieve positive EBITDA by the first half of 2026. The company's ability to scale production and meet market demand will be critical in realizing this goal. Despite current financial challenges, the successful testing of the CapFormer System and strong customer interest provide a promising outlook for future revenue growth.
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Explore the complete 8-K earnings release (here) from Origin Materials Inc for further details.
